Dr Reddy's Labs, Mankind Pharma riding on strong growth drivers

Two Indian pharma majors Dr Reddy's Labs (DRL) and Mankind Pharma reported strong performance for the quarter to September characterised by double-digit growth in revenues and improved business prospects. Despite the slowdown in the growth of acute therapies in India in the quarter, their India performance posted double digit growth.

For the first time DRL crossed ₹8,000 crore in revenues in a quarter. It posted double-digit growth across all its business segments - except the European business. Certain one-off items impacted the company's profitability and margins - upfront cash paid for acquisition of the nicotine replacement therapy portfolio, government land tax, picking up of minority interest in Nestle and impairment charges.

The company spent around 9% of its revenues towards R&D. Price erosion in the US having been limited to single digits helped its North America business post double-digit growth. The company continues to deliver on its guidance of double-digit revenue growth and Ebitda margin of over 25%. Mankind Pharma, which earns over 90% of its revenues from India, outperformed growing 3.4 times in volumes compared to Indian pharma market growth. India business revenues grew 10.5%, partially impacted by regulatory headwinds in certain key products in the acute segment and field force optimisation.


The revenues of its consumer healthcare business grew 20% driven by steady performance of its key brands like Manforce, Gas-o-fast and HealthOk.

Revenues from exports grew 57% y-o-y with the company launching one new product in the US during the quarter taking the total launched products to 42.

The company has guided R&D spend of 2-2.5% of sales in FY25. Raw materials and other expenses as a proportion of revenues was lower than the year ago level aiding in Ebitda margin expansion of 240 bps to 27.7%.

With the acquisition of BSV completed, the coming quarters will reflect the synergies the company derives from the buy that has brought high-entry barrier super speciality portfolio to Mankind.

Gaining 20% in the past one year, the DRL stock has underperformed the benchmark Nifty-50 index as well as ET Pharma index. In contrast, the Mankind stock outperformed posting gains of 54% during the same period.